Chick-fil-A expanding, plans to open fifth restaurant in Springs

Filed under: Retail | Tags:,

The crew of the North Carefree Chick-fil-A got a visit from company owner, Dan Cathy, this week while he was in town to finalize the purchase of a Garden of the Gods location. From left, Issac Poole, Chris Westerman, Natalie Sizemore, Cathy, Colette Neven and James Tuliszewski.

Atlanta-based Chick-fil-A will add six locations in Colorado within the next 12 months, including one on west Garden of the Gods Road, which will employ 65 people.

Chick-fil-A President and Chief Operating Officer Dan Cathy said the privately owned chain will grow by 64 restaurants during 2009.

“We’re growing because we’ve got the cash to sustain our growth,” Cathy said. “We’re not out there borrowing from banks.”

That principle of not borrowing comes from founder and chairman S. Truett Cathy, Dan’s father, who launched the first Chick-fil-A during 1967.

“Thank goodness we have a lot of historical wisdom,” Dan Cathy said. “We can get through the tough times because we have financial depth and customer loyalty. And even though people may be cutting back on a lot of things, they are still visiting our restaurants.”

With the restaurant industry mired in a recessionary slump, Chick-fil-A enjoyed its best sales year during 2008. The company had $2.96 billion in sales, a 12 percent increase compared to 2007, and recorded its 41st consecutive year of sales growth. Same store sales for 2008 rose 4.59 percent year-over-year.

Although the company is headed in the opposite direction of most retailers, Cathy said that Chick-fil-A is paring down expansion plans for 2009.

“We want to be cautious,” he said. “We want to grow, but not as fast as if the economy were strong. One thing that’s surprising … in this economy (is that) you would expect commercial real estate prices to drop, but that’s not happening. Because so many retail developments have been shuttered, you have the same number of retailers competing for dramatically less development sites.”

Chick-fil-A opened its first location in the Springs at The Citadel mall during 1984. Its Chapel Hills Mall location opened a few months later. The company added stand-alone restaurants on North Carefree Circle during 2003 and North Academy Boulevard during 2005.

“Shopping mall activity has really taken a hit,” Cathy said. “The malls are perceived to be upscale, and they don’t typically fare well in a down economy. So, they are more susceptible to swings in consumer spending.”

Despite having a large number of locations in shopping malls, Chick-fil-A reported its 16th straight year of double-digit sales growth. Cathy attributes the company’s success to its customer-service model and focus on creating brand loyalty.

“I noticed we have over 400 Facebook fan groups, and two of those have over half a million people,” Cathy said. “It’s a cult-like following, and it’s neat to see that kind of loyalty.”

Cheap scoops

In a nationwide promotion April 29, ice cream retailer Baskin-Robbins will reduce the price of all 2.5 ounce ice cream scoops to 31 cents.

All four Colorado Springs locations will participate in the third annual program entitled “31 cent Scoop Night.”

The company plans to make a $100,000 donation to the National Volunteer Fire Council’s National Junior Firefighter Program in celebration of the campaign. The program serves as an umbrella organization for local junior firefighter programs. The Baskin-Robbins donation will provide scholarships to outstanding junior firefighters.

Hobby Lobby hikes wages

Privately held Hobby Lobby Stores Inc., a 400-store national retail chain, is raising the minimum-wage for its full-time employees to $10 per hour.

The company said up to 6,900 employees will be affected.

The national minimum wage is $6.55.

Hobby Lobby projects continued revenue growth during 2009 and plans to open 25 stores nationwide, which will create an additional 1,000 jobs.

Last year, the company gave employees a 25-cent per hour raise to help offset the rising cost of gasoline.

Scott Prater covers retail for the Colorado Springs Business Journal.